The Olympics are making their return to Paris after more than a century. And while the athletes are gathered, tourists may be staying away.
Hotel rates are elevated for the duration of the event and further increased as a result of the hike in tourist tax, Oxford Economics found in its latest report. The increased tourist tax will see tourists paying almost 200% more tax per night and ranges from €2.6 to €14.95 ($2.8 to $16.21) for luxury accommodation per night, based on accommodation types.
Citing a report from Lighthouse, the study found that average hotel prices in three- to five-star hotels have surged by 41% to 61% above the yearly average during the event. Anticipated hotel occupancy rates have been climbing at a slower pace the start of this year, possibly due to the increased prices. However, data from STR in June revealed that hotel booking levels in Paris were nearing 80%.
While occupancy during the duration of the Olympics has been showing promise, the weeks leading to the event has seen tourists avoiding the city. Closures around the city will cause disruptions to traffic, which in turn will impact businesses dependent on normal tourist volumes. Additionally, event-related hikes in tourism tax is expected to result in travelers’ budgets, resulting in decreased spending at tourist attractions and retail establishments, Oxford Economics said.
Air France-KLM has already warned that the event may result in a drop in revenues of up to €180 million ($195.23 million). Delta, the U.S. airline with the highest number of flights to Paris, predicted a $100 million revenue loss this summer as a result of travelers opting to visit Paris after the Olympics concludes.
International markets have been avoiding France, the airline said in a statement. Travel between Paris and other destinations was also below the typical June-August average, as residents in France appeared to be postponing their holidays until after the Olympic Games or considering alternative travel plans.
Travelers seem to be maintaining a distance from visiting the popular tourist attractions in Paris or skipping the city entirely due to potential security risks, high prices and fears of overcrowding.
The Olympics may not give Paris as much of a boost as anticipated until mid-August, Moody’s predicted. According to estimates by the Paris Tourist Office, Paris is set to welcome more than 11 million visitors during the event. Of this, only around 1.5 million will come from abroad, Moody’s said in a statement.
“Many people expected Paris hotels to be sold out, with prices surging. However, recent reports suggest that bookings during the Olympics haven’t reached this level. One reason for this is that the French are using the Olympics to showcase the city and attract visitors over the long term, rather than just trying to lure visitors to ensure full occupancy during the event itself,” said Ermengarde Jabir, director of economic research at Moody’s. “Based on other recent Olympic host cities, London and Tokyo being two key examples, this strategy works remarkably well – even for cities with timeless and enduring allure, like Paris,”
Hotel rates are expected to climb, although some visitors may opt for short-term accommodations as Parisians escape to other parts of the country or even abroad for their summer holidays. These short-term home rentals will divert some custom from hotels, as their prices are often on par with them or even cheaper and they may offer better locations and more flexibility. The retail sector, especially establishments related to food, will also benefit from visitors spending during the Olympics, Jabir added.
However, the lull in visitor arrivals to Paris will be a temporary phenomenon, as France continues to be an attractive destination for many source markets. France is set to remain the largest European destination in terms of international arrivals, reaching 101 million this year (up from 98.2 million in 2023), according to Oxford Economics’ latest forecasts. Tourists who cannot afford to visit the city during the mega event may come at a later date or choose to travel during the Paralympic Games, which will be held at the end of August till early September, Oxford Economics said.
